Hayden Adams, the creator of Uniswap, posted his first personal blog since 2019 last Monday. It was a bold declaration: 'Automated Market Makers will win the biggest markets in the world.' Within 48 hours, a former trader from XTX Markets, one of the world's largest quantitative market-making firms, fired back: 'AMMs are going to zero.' The response was not a polite disagreement. It was a frontal assault on the entire premise of decentralized trading.
This is not just a technical debate. It is a clash of worldviews. On one side, the vision of a permissionless, transparent, community-owned financial infrastructure. On the other, the reality of professional capital markets built on speed, risk management, and institutional trust. As someone who has spent years building decentralized systems and watching them crash during volatility, I can tell you: both sides are right, and both are wrong. The real question is not which technology is better. It is: who do we trust to manage our financial lives?
Context: The Battlefield of Tokenized Assets
To understand the stakes, you need to understand what Hayden Adams is actually saying. He argues that as real-world assets like stocks, ETFs, and bonds become tokenized, the primary trading pair will no longer be 'asset vs. US dollar.' Instead, assets will trade against each other. A tokenized NVIDIA share will trade directly against a tokenized SPY ETF share. In this world, AMMs—with their ability to create liquidity for any pair of tokens without a counterparty—are the natural infrastructure.
This is a compelling vision. It aligns with the crypto ethos of composability: every asset becomes a building block in a larger financial Lego set. But the former XTX trader counters with a brutal reality check: 'Who wants to swap NVIDIA for SPY?' The implication is that professional traders don't want to exchange one high-conviction asset for another. They want to trade in and out of cash, or use sophisticated hedging strategies that AMMs cannot handle. For them, the market is not about swapping tokens; it is about risk transfer and price discovery.
This debate is happening at a critical moment. The tokenized asset market is still nascent, but it is growing. According to data from rwa.xyz, the total value of on-chain real-world assets has surpassed $15 billion. Most of this is in private credit, but the tokenization of public equities and ETFs is accelerating. Protocols like Ondo Finance are already issuing tokenized versions of BlackRock's money market funds. The infrastructure for trading these assets is becoming the next battleground.
Core: The Anatomy of the Argument
Let’s break down the technical claims. Hayden Adams’s argument rests on the assumption that AMMs can handle the liquidity profiles of traditional assets. Uniswap v3’s concentrated liquidity model allows LPs to allocate capital within specific price ranges, theoretically providing deep liquidity at low slippage. For a low-volatility asset like a blue-chip stock, this could work. But the former XTX trader points to a fundamental flaw: AMMs are passive. They do not engage in price discovery or inventory management. Professional market makers actively quote prices, manage risk, and absorb imbalances. An AMM is just a formula. It cannot decide when to pull liquidity or hedge against a market crash.
Based on my audit experience with decentralized exchanges, I have seen this failure firsthand. During the May 2021 crash, several AMMs saw their liquidity pools drained because the constant product formula forced LPs to sell into a falling market. The code did what it was designed to do, but it was economically catastrophic. In contrast, human market makers closed their books and waited for stability. This is the core tension: AMMs are transparent and predictable, but they lack the adaptive intelligence of professional traders.
The market micro-structure argument is deeper than it appears. The former XTX trader’s critique is not just about AMMs being bad at large orders. It is about the role of market makers as shock absorbers. In traditional markets, a market maker like XTX or Citadel Securities provides continuous two-sided quotes. They take the other side of trades, even when it is uncomfortable. They are compensated for this risk through spreads and rebates. In an AMM, liquidity providers are the market makers. But they are not professionals. They are retail users and automated bots. When volatility spikes, they withdraw liquidity, making the system less stable. This is the 'Ghost of the 1987 Flash Crash' that haunts all automated markets.
But the debate is not just about risk management. It is about incentives. The former XTX trader’s firm, XTX Markets, is a quantitative firm that uses machine learning and low-latency infrastructure to capture microsecond advantages. They are not interested in a world where every trade is a peer-to-peer swap. They want a world where they can capture order flow and provide liquidity profitably. AMMs, by design, eliminate the need for a middleman. They are a direct threat to the entire business model of professional market making.
This is where the moral framing comes in. I have always believed that blockchain technology should serve the many, not the few. During the Prague Consensus Workshop in 2017, I saw 40 developers choose to build open-source projects instead of scam tokens because they believed in the philosophy of decentralization. But I also saw the limits of that philosophy. In 2022, when the bear market hit, I started a peer-support network called 'Reclaim' for burned-out developers. Many of them had built DeFi protocols that failed because they prioritized code over community. They assumed that if they built it, users would come. But users are not just wallets. They are humans with needs, fears, and trust issues.
This brings us to the core insight: AMMs are not just algorithms; they are social contracts. They encode a set of assumptions about how markets should work. The assumption is that liquidity should be open, permissionless, and mathematically defined. The assumption is that anyone can be a market maker. The assumption is that the code is the law. But the former XTX trader is challenging these assumptions. He is saying that markets are about relationships, trust, and expertise. An AMM is a machine that treats every trade equally. But in the real world, not all trades are equal. A large institutional trade requires a different kind of service than a retail swap.
Contrarian: The Blind Spots of Both Sides
Here is the contrarian angle that neither Hayden Adams nor the former XTX trader is willing to admit: they are both describing a future that is already here, but they are looking at it from different sides of the same coin. The AMM is not going to replace professional market makers, but it is also not going to zero. The future is a hybrid. We already see this in Uniswap v4’s hooks, which allow developers to add custom logic around liquidity pools. This could enable professional market makers to deploy their strategies on top of AMMs, using the pools as a base layer of liquidity while they provide additional depth and risk management.
The real blind spot is regulation. The former XTX trader works in a world where every trade is subject to KYC, AML, and securities laws. Tokenized assets, especially equities and ETFs, will not be traded in a regulatory vacuum. The SEC is already scrutinizing decentralized exchanges. If you want to trade a tokenized NVIDIA share, you need to ensure that the share is actually backed by a real share, and the depository is compliant. This is a massive operational challenge. AMMs are designed to be permissionless, but permissionless trading of securities is a violation of securities laws. The only way forward is a 'permissioned AMM', where only approved participants can trade. This is not the vision Hayden Adams is selling. It is a compromise that neither side is comfortable with.
I have seen this tension play out in my own work. In 2025, I advised an EU regulatory task force on creating guidelines for decentralized governance. We struggled with the question of how to protect retail investors while preserving the benefits of decentralization. The answer was not a straight choice. It was a spectrum. Some protocols chose to be fully compliant, with KYC and whitelists. Others chose to remain open but accept that they could not serve regulated markets. The tokenized asset market will likely follow a similar path. AMMs will serve the long tail of assets that are not securities, while professional market makers will dominate the high-value regulated assets.
The psychological dimension is also overlooked. The former XTX trader’s blunt dismissal of AMMs reflects a deeper anxiety: the fear that the old guard’s expertise is becoming obsolete. The crypto community often dismisses this as 'rage against the machine.' But it is real. In my bear market support network, I met many traders who struggled to adapt. They had spent years mastering order books, only to see retail traders swap tokens on Uniswap without understanding the risks. The emotional toll of technological disruption is significant. We need to build bridges, not walls.
Takeaway: A Vision for Inclusive Markets
So, where does this leave us? The debate between Hayden Adams and the former XTX trader is a healthy sign. It means the tokenized asset market is becoming real. It is no longer a theoretical discussion. Both sides are fighting for the right to define the infrastructure of the next financial system. But the winner will not be the one with the best algorithm. It will be the one that builds for humans, not just nodes.
Education is the ultimate yield. The more we understand the strengths and weaknesses of AMMs and order books, the better we can design a system that serves everyone. Imagine a future where a retail investor in Prague can swap a tokenized European ETF for a tokenized Asian bond with the same ease as swapping a meme coin. Imagine a future where a professional market maker can provide liquidity on a decentralized exchange using their own risk models, while still being compliant with local regulations. That future is possible, but only if we stop treating this as a zero-sum game.
The best technology is the one that doesn't need a manual. But it also needs to be trusted. And trust is not built by code alone. It is built by communities, by transparency, and by a commitment to fairness. As I reflect on my journey from the Prague Consensus Workshop to the policy tables in Brussels, I am reminded that the most important infrastructure is not the protocol. It is the people who use it. Let’s build a market that works for all of them.